Wendy’s ($WEN), once not exactly the powerhouse it is now, has seemingly captured increased sales store growth, and impressively so. EPS projections for next year are expected to grow 23.16%, and ~27% next year, and that’s not even the best news. Looking at the past EPS growth, there has been a 70.30% increase over the past 5 years, and a 28.3% growth in sales quarter over quarter.

Are people really buying that many Wendy’s Frostys?

Taking a look at Q2 earnings call slides, we find some interesting highlights:

22nd straight quarter of positive same store restaurant sales

36 global stores opened in the quarter, with 69 global store openings year to date

Year over year cash flow growth of 33.6%

Increasing or adding deliveries: delivery available in 40% of North American restaurants within the DoorDash partnership

Delivery drives an average check higher 1.5x-2x

Positive franchisee sentiment

Q2 ending cash balance of $195 million

While we don’t get to see a breakdown of how many hamburgers or Frostys were actually made or sold, we can see that Wendy’s is an attractive long term buy who seems to be a smaller, yet effective player within the fast food industry. They may not be McDonalds ($MCD), but they are still a major force to be reckoned with.

Making money on Wendy’s

With a street value of $20, and various financial models saying the same thing, buying options could be the way to catch more of an upside to the square burger chain. Looking at a previous close price of $17.32 (9/24/18), we want to buy 17 JAN 2020 $20 CALL options. $1.30 cost per option, and 10 contracts puts our entry point at $1,300. If the stock hits $21 by 23 MAY 2019, sale price would be $2.43 an option, giving you a profit of $1,130, or an 86.9% return on your investment.

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